Transcript

Adora Cheung – All right. Hello everyone. My name is Adora. I am one of the partners at Y Combinator. I have Reham from AptDeco, Alana from Bulletin, and Tiffani from The Human Utility.

Today, our discussion will be around essential startup advice. So I think there’s a lot of actually good advice and books, articles, and even on Twitter sometimes, but they tend to be, I think, very generic and abstract in an attempt to try to make it apply to everybody as much as possible. So today, I wanna go over some of that common advice you probably see and dive one level deeper into how it applies to these three folks and their startups, and go from there.

So the most common advice I hear all the time and I give all the time is make something people want. It’s so common that’s almost the motto of Y Combinator. So maybe you guys can start off with introducing yourselves and what’s the one-liner for what you’re building and how did you know, why did you think it was something people wanted.

Reham Fagiri – Hi everyone. I’m Reham Fagiri, Co-founder, and CEO of AptDeco. We are a marketplace for buying and selling furniture based here in New York City. So if you’re selling furniture, definitely check out AptDeco. I have to plug all the time.

So the reason why I started AptDeco was actually out of my own frustration trying to sell furniture on Craigslist, had a really bad experience, realized that something has to be done to make it better and more efficient. So we are a one-stop solution. We take care of the pickup and delivery, we handle payments online, we verify everything before pick up. And that was the reason why we started it, was because out of my own frustration.

Alana Branston – Hi guys. I’m Alana Branston, Co-founder, and CEO of Bulletin. Bulletin is WeWork for retail space. So we build physical retail stores where direct to consumer brands can sell their products for a monthly membership fee. We have two stores here in New York. The stores are actually filled with all female-led brands. So yeah, it’s completely for women, by women.

And yeah, when we started the business, we actually did not build something that people wanted at all. Like, it was a disaster. We started off with, it was basically, like, an Etsy competitor. It was like a cool, curated Etsy was the idea. We, like, literally didn’t sell anything. It didn’t work.

And then we started talking to those users and basically asked them, “Okay, like, what can we do that is helpful because this clearly is not?” And figured out that they wanted access to retail space and how hard it was for them to get into stores. So yeah, we eventually built something people wanted. It just took a while.

Tiffani Ashley Bell – Hey, everybody. I’m Tiffani Ashley Bell. I am the founder and executive director of a not for profit organization called The Human Utility where we essentially pay water bills for people that can’t afford their own. We’ve done that for like 1,000 families in Detroit and Baltimore, and a bunch of surrounding cities since…Thank you. Thank you.

It’s not really we either. It’s all you guys have donated. But you know, we’ve done that for 1,000 families since we started in July 2014. And it was more of make something people need. So we essentially crowdfund the money to help people.

And I just read one day, I’m not from Detroit or anything like that, I just read about what was happening in Detroit, because I was actually working in City Hall, Atlanta, and I was just thinking to myself, like, “What kinds of failures had to happen in City Hall where somebody just decided that if you’re poor, we’ll turn your water off?” And I thought that was pretty crappy.

So friends and I got together and just decided to like, “You know, we’ll throw away $100 bucks in a weekend, on some shirt we don’t need, in a bad restaurant. So why not give that to, you know, people to help with their water bills?” But it sounded like the whole internet wanting to do that. So I’ve been doing that ever since.

Adora Cheung – Awesome. Okay, so another piece of advice is, do things that don’t scale. So give us one example of something that you did that wasn’t really scaling but you had to do it anyway. And maybe it’s related to how you got your first user?

Reham Fagiri – I have a lot. So when we first started, I don’t know how many people are doing marketplaces but the big problem with marketplaces, just they call it the chicken and egg problem is you need to get, you know, content and also buyers. And so how do we convince people to actually transact on our platform? So how do I get furniture in a platform where nobody will trust that I actually am a real legitimate business was the question that we were trying to tackle.

So we were going on Craigslist. The reason why I actually built the platform is because of Craigslist. But we were going on Craigslist just telling people, “Hey, you should try AptDeco. You know, we’re going to take care of delivery etc., etc., etc. Some people, you know, were convinced enough to list but the part that actually came out of one of my partner meetings at YC was, “Instead of having people, email them, and have them go list on your website, why don’t you just list it for them?”

And so that was like, “Oh, wow is that even kosher?” I mean, I don’t think it is but…So we just started just going on to Craigslist and literally just copying content from Craigslist to our site. And then there’s a whole other story of, like, once something sold, how did we get it to the customer. That’s a whole different story.

Alana Branston – Yeah for us, basically, when we were pivoting from this, like, Etsy competitor idea to the retail space idea, we really didn’t have any money. I think we had $20k that we had gotten from YC fellowship and we were like, “Okay, how are we gonna test, like, a retail space concept?” And so my co-founder and I, it was just the two of us at the time, started doing these, like, outdoor weekend flea markets as a way to test the concept. So we literally rented out this, like, overgrown, vacant parking lot in Williamsburg. It was, like, a toxic wasteland, and we had all of these brands come.

We’d had like 40 brands come every weekend and they would come and like set up their product and sell. And, like, it actually went really well where, like, they were making a lot of money. We were making money finally. And we use that to basically prove that like, okay, brands will show up and pay for space, and like, there’s definitely better ways to do this. And yeah, it was completely unscalable, but it did, like, prove our point, which was good.

Tiffani Ashley Bell – So, we have kind of a two-sided thing where we have donors and then the people that actually need the help. And so, if you follow me on Twitter, I’m sorry, but that’s like the way that we got the initial donors. But we had all this money that kind of piled up as far as pledges go. And since we’d done everything on social media, we didn’t know how to access, or like, get to the people that needed the actual money.

But what ended up happening was just, like, we got really low tech and we just, like, designed some postcards and send them to people. And so, like, if you…the USPS has, like, a way where you can just like target certain blocks and just kind of, like, say you want to send, you know, 500 postcards to this street, and it’s like, kind of gerrymander the way it looks like. But, like, we ended up just kind of doing that, and just kind of going from our database and just saying, “We have a lot of people from Detroit in this zip code that are applying, so why not just target the entire zip code?” And we just started doing that kind of thing.

So these people were not on social media, so we couldn’t just keep tweeting for them. And actually, maybe I’ll talk about it later, but the city wasn’t helping us either, because they were kind of like, “Who the hell are you?” So they were just, you know, we didn’t get help in that way. We kind of had to, like, just hack it in that way and it turned out to be a really interesting sort of thing to send out postcards.

Adora Cheung – So the next one is, find 10 to 100 customers that really love your product. So how did you determine that people were loving your product? Like, how did you define that either qualitative or quantitatively?

Reham Fagiri – So I’ll continue along the same story. So for us, once we started, you know, listing these products from Craigslist and trying to… We got our first sale and we’re like, “Wow, okay, what are we going to do to actually fulfill the sale because these sellers don’t even know that we’ve listed their product on our platform?” So we were trying to figure out how to fulfill that order. So, you know, the first time I tried to email, “Hi, I’m the CEO of AptDeco. You know, we sold your product on AptDeco, and you know, we’re gonna pay you…” And it just didn’t work. Nobody responded.

So then we just realized, like, “Hey, like why don’t we just actually just pretend like we’re a Craigslist shopper, go and just email them, like “Hey, I’m gonna buy and we just pay them in cash.” And that’s what we did. The most amazing thing that happened out of that is because we were actually visiting every person’s home, we were talking to our customers, and we realized once we told them why we started the business because once we got to their home we would tell them, “Hey, this is, by the way, AptDeco and this is what we do, etc.” They were like, “Wow, this is amazing.” They actually started telling all their friends.

So every time we went and we were doing something very unscalable, 5, 10 people signed up as a result of it. So that was the genesis of, sort of, getting from, you know, 10 to 100 customers.

Adora Cheung – Referrals basically. It’s great.

Reham Fagiri – Exactly.

Alana Branston – And yeah, I feel like we have, like, a pretty similar experience where once we started getting referrals from brands, we felt like, “Okay, like, we’re doing something good enough that people are recommending their friends.” I think we got lucky because our users, they’re in this tight-knit community of brands and so they all would talk to each other. And if someone sold on our store for a few months, and they were making good money, like, they were gonna tell someone else in their community.

And yeah, I think it was like when we opened the third store and we just were able to like book it out immediately, and we like couldn’t believe that people were paying, like, pretty healthy rates to sell in the store. And yeah, it was just, like, finally getting to a point where we were doing something right for the users.

Tiffani Ashley Bell – Yeah, I mean, so the first, again, from donors versus people that we’re helping. So the donor side was, again, just social media, and it turned into like the news finding out about us, and then people signing up from there. And that became, like, me getting stuck in my apartment for like two weeks talking to the press over and over again about what we’re doing. Because it was kind of weird if you think about it to pay somebody else’s water bill. So people were kind of fascinated with that aspect. But then as far as the people we helped, again, as the postcards within, like, you know, Facebook groups and stuff like that.

Adora Cheung – So let’s talk a little bit about competitors. So the common advice is, just ignore it. You’re growing. You know, startups are gonna die because of suicide, not murder. So how do you guys think about competitors?

Reham Fagiri – It’s definitely, it’s easier said than done to ignore them for sure. But, you know, I’ve learned through time now where this is our fifth year in business is that is really the best advice is to try to ignore them. And what I’ve learned over time is, you know, just focus on the things you can control. And you can control make delight in your customers, you can control making, you know, a product that people want and things of that nature.

We’ve had competitors that have raised, you know, tons more money than we have to date even and they’ve shut down. So it doesn’t really matter at the end, it’s all about the execution and just focus on the things that will make you, you know, compete in the market.

Alana Branston – Yeah, I think we try and ignore them as much as possible. So I definitely have, like, my Google Alert set to see like if and when they announced certain things, and I think, you know, we’ll look to see how they’re positioning their product in the market or when they’re raising money. But yeah, I think like, the more you can just keep your blinders on, and look at your metrics and look at your milestones, and keep your team looking at that and not be like, “Oh my god, they just raised $23 million, like, what are we gonna do?” It’s distracting and it doesn’t really help you in any way.

Tiffani Ashley Bell – Yes. So the not for profit sector is a little different because there’s no totally competition. Like it’s not just this like, “Oh, everybody’s like trying to help the world or whatever.” Because it’s actually surprisingly cutthroat, which I learned kind of on the job. Maybe if he pulled me afterwards I’ll tell you about certain mafiaesque phone calls I got from other organizations. I’m not even kidding.

For us it’s been, like, learning how to like communicate the work that we’re doing really well and also just kind of pulling at people’s heartstrings, and like, learning how to do the storytelling. And then also…

Adora Cheung – You mentioned you butted heads with the cities a little bit. Can you…?

Tiffani Ashley Bell – So what’s that?

Adora Cheung – You butted heads with the cities a little bit or they weren’t a couple at all?

Tiffani Ashley Bell – No. So I think when we launched we embarrassed Detroit, which wasn’t the goal. We just help people when they didn’t. And so they didn’t…I mean, it’s true. It’s true. So they told people not to come to us for help because they’re like, “Well, you know, if you need help come to us,” but they weren’t helping people. They were turning off cancer patients for crying out loud. And this is the kind of stuff that was going on.

But we got a call from a certain very big nonprofit, it’s a national organization, and they saw us as competition, which was funny, because I was still, like, operating this out of my bedroom, basically, as a fundraising thing. But it’s just the principle that, you know, we got more press, people were…what we were doing was resonating with people more and we could show actual, like, success stories. And we weren’t like building six houses with hundreds of millions of dollars and that kind of thing.

So I think that the nonprofit sector has competition still, but I think if you, like, show that you operate better, you’re actually using the money for what you say you are, and you’re like, putting those success stories out, and then you’re talking about, like, the systemic change that you’re trying to actually kick off, that actually resonates with people. Because that’s the question I get all the time too, like, “How are you going to do this? Like, what’s the long-term sort of plan?”

And for us, it’s actually not to keep raising money, but it’s actually to like have laws passed around water affordability and just kind of use like a lot of startup-esque principles to do that.

Adora Cheung – Cool. So it’s often said that you shouldn’t start scaling, as in hiring lots of people until you find product-market fit. We kind of went over it, we talked about referrals and stuff like that, but maybe you can go over, when did you know you should hire your first person? Who was your first important hire and why did you hire that person?

Reham Fagiri – Product-market fit for us was when we decided to take on delivery and make it in-house. So when we started the business, we did not wanna touch the furniture. We just wanted to provide the platform. A year and so into it, we were working with third-party moving companies, we realized that is just the quality of service was not up to par and they were just canceling jobs on us last minute. So we hired some guys off of grids [SP] again and rented us a van and that day you know, we had incredible feedback from customers.

Fast forward, you know, now we have over 10 trucks in the city. And what we saw was as soon as we brought delivery in-house, you know, we talked about referrals, but really it skyrocketed the type of referrals, the quality of service as well, the branding, also our metrics. We now understand their metrics very well. And that was really the basis for it.

I mean, our first hire was customer service, because it was all about delighting customers. And what I learned over time is, you know, your needs as a business change over time. So our first hire was customer service. And that was, at the time the most important hire. We fast forward a couple of years later, our head of operations and obviously our engineers, etc.

Alana Branston – Yeah, for us, it took us about a year and a half before we got to product-market fit. Like, we pivoted so many times, and just kept taking, like, the little things we learn and use it for the next version of the company we’d run. But yeah, it literally wasn’t a year and a half until we got to a point where we were opening retail stores, they were working, and the brands were happy.

And then to answer your question about the hiring, I think our first important hire is really what got us to, like, full product-market fit in my mind. There was basically a point where we are treating the stores as a service. Like, any brand can come and sell their product. And so we ended up with this like crazy store where there was like Fitbit competitors, next to blankets, and it just didn’t make sense, obviously.

And so we hired our Director of Product, Maggie Brain, she came from J.Crew, who just totally transform the business. She’s a merchandiser, and so she was able to really pick the right brands, pick the right product and price point. And I mean, the stores just took off after that. But it was like that final key higher before we were like, “Okay, like, we can scale this. We’re good.”

Tiffani Ashley Bell – Yeah, for us product-market fit is just like having people continue to support us basically. So we’ve been trying to build a stronger recurring giving program. So that’s still kind of in the works actually, because like, I had never run a non-profit before, so I didn’t know, like, what we should actually be doing and what that looks like as far as success besides changing laws. So we’re still doing that.

But as far as, like, the first hire we had, it was also a customer service because like, you know, we had all these people that were applying for help that, like, I couldn’t talk to them all on my own. We talked about stuff that didn’t scale. I was turning into kind of, like, a social worker slash therapist by like, talking to everybody who, like seriously, like, everybody who applied, I talked to them on the phone for at least 30 minutes, which was good in the beginning, because like people were feeling heard for once. Because when you deal with a lot of people that are in poverty, the thing that’s common amongst all of them is they get overlooked and ignored. So I just listened to people more.

But Kate who used to direct nonprofits at YC, she kept telling me like, “You need to hire somebody because you’re looking worse and worse every time I see you and you can’t, like, you know, you can’t do this on your own and whatnot.” So I actually the spring of 2016, I’m an engineer by the way, too, so, like, I took like a month off from everything else and just build out what became our case management system.

And then that allowed me to actually hire the customer service person because they would have had to know Rails otherwise because while we had was the Rails console. But that was our first customer. I mean, that was our first hire.

Adora Cheung – Somehow related to that is when founders come into YC, we say, “Please, please remember to get some sleep and some exercise.” So how do you guys stay sane while running a startup? Or do you?

Reham Fagiri – Still trying to figure that one out? Yeah. So this year, at least, I’m trying to make it to the gym more and travel. It’s still work in progress, but definitely, it’s very, very important. And what I learned over time is, you know, it’s not about the number of hours, it’s more about how productive you are. You can work six hours and be more productive than working 15 hours in a day. So I’m trying to still implement that, but yeah, it’s very, very important.

Alana Branston – Yeah, I think for us, I mean, it’s something where it ebbs and flows. Like there’s weeks where things are just completely insane and we’re opening a new store and I just feel, like, very unhealthy, not okay. I think the whole team gets that way sometimes. But yeah, I mean, I think when we do have like, kind of a down moment, like, trying just to really take advantage of it, and just, you know, not go into the office on the weekend.

Running has really helped me. I know, like, a lot of people hate running, I used to, but for like, just my mental state, like, running has done wonders for me. So yeah, I know people hate it, but maybe try it.

Tiffani Ashley Bell – I mean, this is actually the end of my vacation this week. Like, literally, I was on vacation this entire week, which never happens. But the three things that I’ve been doing more is like going to therapy. I work with an executive coach that helps me, like, stay organized and prioritize and things like that. And then, like, something I started in the last couple months is acupuncture because it’s helped with, like, energy issues, and like actually getting me to sit down somewhere like during the business day. So those are really my quick things.

Adora Cheung – Cool. I know we’re over time, but I apologize, but I want to add in one more question because I think it’s so important. And that is advice is founder relationships matter more than you think. So can you talk about your relationship with your co-founder and how do you guys stay sane with each other and balance things?

Reham Fagiri – So for us, I have a co-founder. And so my background, I’m an engineer and he came from marketing and sales. So early on, we tried to create delineation of roles and, you know, we butt heads still all the time, but at the end of the day, someone has to make the final decision because if it was always a democracy, and we both have to consensus, we’re just never going to move quickly.

So what we do is, you know, any product related things I essentially have the final say, any marketing related things, he has the final say. For example, we want subway campaigns, I really did not want to spend the money and he was like, “Well, we’re gonna do it.” And we did and it actually works out to be very well. But you know, I think this is the important thing is creating that sort of…making sure that you have a structure where you’re able to make decisions fast and quickly. And conflicts are okay but you have to figure out a healthy way to manage it as well.

Alana Branston – Yeah. I feel like I just got so lucky with my co-founder, Ally. Like, we’re very complimentary and different, like, skill sets and personalities. Like I’m more introverted, I like to kind of manage things from behind the scenes. She is like the total opposite. She’s like highly extroverted, amazing salesperson, amazing press person. And so we work really well together.

And I think even from the very beginning when it was just the two of us like working in my apartment, we just could kind of like stay in our own lanes. Like, I just knew what I was good at and what she was good at, and yeah, we worked really well together. So yeah, I think when you’re looking for your co-founder, even if it’s not like she’s the technical one, I’m the nontechnical one, like, I don’t think it needs to be like that. But looking at, like, different personality types and even soft skill sets, it really helps to have a little bit of a mix there, I think.

Tiffani Ashley Bell – So, my original co-founder couldn’t go through YC with me, but she’s like a very dedicated donor and advisor of the organization. But the next person that I think of that has been around just as long technically is the customer service person I hired, Marie. I’m the fundraiser and the person that, like, does all the technical stuff but she does the customer service, which again I burnt out on.

But another thing that she’s really good with is people. Like, I still labor under the belief that this is ridiculous, I have to do this as an organization, but she is just kind of like, “You know, okay, I’ll call the city people and talk to them for you because I’m on the phone and like, “Why the hell can’t you do this or whatever?” And she’s patient enough to be like, “You know, I will talk to them I will make this work for us or whatnot.” And she’s way better at that stuff and I am because I’m just like, to me common sense this shouldn’t have to be a thing. But she’s able to talk to people and kind of finesse them and whatnot. So I really, like, appreciate that aspect of the work that she does.

Adora Cheung – Cool, awesome. Well, that’s it. Can you give these three a round of applause? Thank you so much.